Bill Jones Fraud Case

Bill Jones works for a car dealership as the bookkeeper and he is responsible for tracking all the income and expenses, taking the deposit to the bank and writing checks and payroll. The owner only receives verbal reports from Bill regarding the dealership 's financial status. There was a recent issue with utility payment checks being returned not sufficient funds but Bill said he accidently put a deposit into the savings account rather than the checking account. The owner doesn 't look at the bank statements. The owner wants to know what areas of the business are at risk for fraud, the symptoms of fraud, how could opportunites for fraud be reduced and the impact of fraud.

A fraud risk assessment helps management figure out what areas

Specifically identifying the area that is at risk for fraud is the checking account. Bill makes the deposits, writes the checks, including payroll checks, and the owner doesn 't look at the bank statement. In addition to that, Bill also keeps track of the money coming into the business. *********combine the 2 ideas of a in general to specific risk assess***end in a transistion from risk assessment to red flags

Symptoms of fraud are also called red flags and they indicate there might be something wrong. These symptoms require investigation to discover the cause, whether it is fraud or not. There are 6 groups of fraud symptoms: accounting anomalies, internal control weaknesses, analytical anomalies, extravagant lifestyle, unusual behavor, and tips and complaints (Albrecht, Albrecht, Albrecht, & Zimbelman, 2012).

Accounting anomalies are things that are not normal within the accounting records. This could be missing or fictitious documents or false entries into the books (Albrecht,

Analytical anomalies are indicated by anything that is not normal, for instance, procedures, transactions that happen when they normally wouldn 't, employees who perform tasks that normally wouldn 't, and unusual transactions amounts (Albrecht, 1996).

An extravagant lifestyle is a symptom of fraud when the fraudster is stealing money to support a lifestyle that their income couldn 't support, like buying expensive houses, cars and clothes (Albrecht, 1996).

Unusual behavior is a stress response to fraud caused by the fear and guilt of committing the fraud. Examples of this behavior are: increase in substance abuse, mood changes and acting irritable and suspicious (Albrecht, 1996).

Tips and complaints are symptoms of fraud because the other employees and managers who work with the fraudster notice when things are not going normally because of their day to day interactions (Albrecht, 1996).

***trans from red flags to opportunities***

There are several ways opportunites for fraud can be reduced: performing a fraud risk assessment, install controls to prevent and detect fraud, train employees to look for and report fraud, and engage both internal and external auditors to perform an independent check (Albrecht et al., 2012). In addition to auditors, the car dealership could have a CFE assist the auditors. SAS 99 says that CFEs are allowed to help the audit committee and board of directors (nix and